Commissioners warn Merkel, Montebourg on mergers
Almunia rebuffs calls from Germany’s chancellor to relax merger control rules in the telecoms sector, while Barnier announces Commission scrutiny of French efforts to block mergers.
European commissioners took to public platforms today to warn member states against trying to advance their national interests at the expense of the European Union’s merger control rules.
Joaquin Almunia, the European commissioner for competition, in a speech in St Gallen, Switzerland, rejected calls from Angela Merkel, Germany’s chancellor, and Jean-Claude Juncker, the centre-right’s candidate to be president of the European Commission, for EU merger rules to be relaxed to allow European telecommunications companies to grow.
He pointed out that member state leaders, including Merkel and Juncker, who was Luxembourg’s prime minister for 18 years, were resisting reforms to encourage consolidation of the EU’s 28 telecoms markets.
Almunia argued that regulatory reform – of the sort proposed by the Commission in September and opposed by a majority of member states – was a better way to bolster the competitiveness of European telecoms markets, rather than carving out exceptions to EU competition rules.
The Commission’s competition directorate-general is investigating mergers in the Irish and German telecoms sectors, which it has threatened to block.
The EU’s telecoms incumbents have long argued that EU competition law is preventing them from growing large enough to invest. They point to the United States, where four firms serve one market of around 300 million people.
Later, Michel Barnier, the European commissioner for the internal market and services, announced that the Commission would investigate a new French decree that gives the national government the power to block US giant General Electric’s bid for the engineering firm Alstom.
The French government, with Arnaud Montebourg, the minister for industrial renewal, to the fore, is loathe to see one of its flagship industrial groups pass into foreign hands and, ever since the €12 billion bid was announced in late April, has instead tried to orchestrate an asset swap with Siemens, with the German group taking Alstom’s energy business while handing over its train-building activities.
“We will need to examine whether [the law] is justified and proportional,” said Barnier today. Barnier’s services will examine whether the decree, which extends a 2005 law protecting the defence and security sectors to other “strategic” sectors including energy, water and e-communications, infringes EU treaty rules that mandate the free movement of capital. The investigation could take years.
More immediately, any decision by the French government to block General Electric’s bid for Alstom, would need to seek the approval of Almunia’s competition department. The EU merger regulation allows governments to intervene in mergers only in certain exceptional circumstances, such as to protect public security or media plurality.
In parallel, the United Kingdom government last week threatened to invoke national interests to block the US pharmaceutical firm Pfizer’s near £65bn (€80bn) bid for AstraZeneca, an Anglo-Swedish company. The centre-left opposition party, Labour, has called for a public inquiry into whether the deal is in the UK’s interest, fearing that Pfizer will cut jobs in the UK and move research abroad.